“GAO’s analysis found that DoD’s report fully addresses three of the seven mandated elements and partially addresses the remaining four. Although DOD’s report discusses the seven mandated elements, GAO found that including additional information would have made the report more consistent with relevant generally accepted research standards and would have made the report more useful to decision makers,” the GAO report stated.

More useful to decision makers? Wait…what?

Let’s take a step back into the recent history of reports on cost-saving measures for the commissaries.

As commissary shoppers, we know that that DeCA operates the commissaries. Prices at the commissaries are product cost plus a 5 percent surcharge. In fiscal year 2015, DeCA’s annual sales for its commissaries were approximately $5.5 billion. DeCA received $1.3 billion in appropriated funds in fiscal year 2015 to operate the commissaries.

Those appropriated funds are currently under the microscope of the defense department.

The National Defense Authorization Act for Fiscal Year 2016 “mandated DoD to provide a comprehensive plan to achieve ‘budget neutrality,’ which DoD interpreted as ending the use of appropriated funding for commissaries and the military exchange system, by October 1, 2018,” as explained in the recent GAO report.

This mandate has caused a lot of head scratching and number crunching for those at both DoD and DeCA.

The Boston Consulting Group was contracted to conduct 2 separate studies that may lead to cost-saving measures. In February, DoD established the Defense Resale Business Optimization Board. This board is working to help implement reforms within and among the commissary and exchange systems.

Then DoD released its report saying budget neutrality will be difficult, if not, impossible. GAO then reviewed that DoD report as it was directed to in last year’s defense budget. That’s what lead to this report and GAO’s recommendation that “DoD provide information to Congress to support its conclusion about budget neutrality; develop a plan for achieving alternative reductions to appropriations; and identify specific metrics for customer satisfaction, product quality, and savings.”

“DoD did not provide a plan to achieve budget neutrality by October 2018 as mandated because according to the report, DoD cannot achieve budget neutrality without reducing savings to patrons or other benefits provided by commissaries and exchanges.”

“For example, the report stated that drastic changes, such as store closures and price increases, would have to be implemented if DOD were required to achieve budget neutrality. However, DOD did not provide additional information about potential steps to reach budget neutrality, such as cost estimates and assumptions, or include specific details about trade-offs, constraints and limitations to achieving budget neutrality such as reductions in benefits,” the GAO report said.

“Instead of providing a plan, DOD estimated a $2 billion reduction over a 5-year period, which would fall short of achieving budget neutrality by about $5 billion. DOD officials told us the cost savings amount was an arbitrary estimate, and that therefore DOD did not develop details on steps it would take to achieve the $2 billion in savings. DOD officials could not explain the assumptions, methodology, data, specific time frames or DOD efforts that would lead to the $2 billion in savings.”

In case you’re wondering why DoD didn’t conduct these types of detailed analysis in its initial report, DoD experts, who were interviewed by GAO investigators for this report, pointed to time constraints as their reason for the lack of specifics.

“According to DoD officials, for some efforts that are already being considered, DoD officials told us that they did not include some information in the report to support their conclusions because they have not had time to verify the information,” the GAO report said.

Here’s another important nugget of information: DoD concurs with GAO’s recommendations.

Now that we know that the decision makers aka Congress lack the information needed to make decisions about changes to the commissaries, what’s the next step?

I have a strong sense we’ll be reading another federal report in the near future.

What do you think of this GAO’s report saying that the DoD’s report on cost-saving measures for the commissaries was incomplete?

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The government is constantly looking at ways to save money and each year the commissary budget comes into question. How can they cut the $1.4 billion commissary budget? Over the years many ideas have been presented, from privatizing the commissary to creating a private brand or even using variable pricing.

It has mostly just been a lot of talk.

The government has finally decided to do something more progressive and hired an outside firm to study ways to save money. These cost-cutting studies will cost the commissary nearly $4 million.

The Defense Authorization Act gave the DoD the responsibility of determining how to save the government money by cutting the commissary budget. The Department of Defense contracted Boston Consulting Group to conduct 2 studies in order to determine exactly how to cut the Defense Commissary Agency (DECA) budget. These two studies cost nearly $4 million and yes, that came out of the commissary budget.

The first study, which started in January 2015, has already been complete and cost $2.3 million. Its purpose was to determine any cost-cutting possibilities. Another contract, this time for $1.44 million, was also awarded to Boston Consulting Group and is already in progress. The goal of this study is to develop a way to compare civilian grocery prices with commissary prices to determine a baseline savings.

The Defense Commissary Agency says that customers save on average 30 percent compared to civilian grocery stores based on their own research. The government doesn’t want to just take their word for it however. Boston Consulting Group is now creating a methodology to determine price comparisons.

Will all of this research be worth the cost? It’s hard for the average consumer to see the justification in spending nearly $4 million of the commissary budget on researching how to save money.

The saying “you have to spend money to save money” comes to mind, but that’s a lot of money. What will the return on investment be? What will commissary patrons get out of this?

Do you think the government will implement any of these cost-cutting recommendations?

The Defense Authorization Act gave the Department of Defense the ability to test some of these money-saving options out, such as variable pricing. Variable pricing would mean pricing products differently across the country based off the price in the market. Products in the north typically cost more than some in the south. That means families in some parts of the country will be spending more on groceries than others.

Critics of variable pricing are quick to point out that military service members receive the same base pay no matter where they are stationed, with only basic housing allowance adjusting for location.

As the law currently stands, the commissary is only allowed to sell products at cost plus 5 percent surcharge. While Defense Authorization Act gives the commissary the ability to test variable pricing in areas, the law would have to be changed to implement it permanently.

The creation of a commissary private label was recommended as another option. Those opposed to the idea say that that might actually result in an increase in cost. Civilian grocery stores that have their own private label spend a large sum of money marketing their products to consumers. You have to build up a trust. As it stands, military families trust that the commissary offers quality products at cost plus a small surcharge.

What recommendations will the government take into consideration and when might patrons see changes?

That is yet to be determined, as the second study has not been completed yet. As most things with the government, this is a long drawn-out process.

Do you think these cost-cutting studies will help identify ways to operate the commissaries without taxpayer money?